Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

By the introduction of competition into the electricity power industry, environmental regulations have effects on the profitability of generators. Considering these changes of circumstances, it is important to estimate the abatement costs of pollutants in a view of improvement of efficiency of generators. The object of this study is to estimate the marginal abatement cost of SOx in the domestic thermal power plant. A translog production function, which is based on Pittman(1981), is used to estimate the costs. According to the estimation results, the marginal treatment costs of power plants using oil and bituminous coal are estimated as 531 and 1,425 thousand won per ton of SOx , respectively. Such a difference seems to be plausible, considering the difference of profitability between two types of plant. A market-oriented measure such as emission rights trading program can reduce social costs more efficiently than maximum allowable rates regulation. Lots of research on the pollution abatement cost by industry and source are need to cope with the change in regulation method.